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Bulk of U.S. debt being carried by older Americans

According to a 2015 report by the Pew Charitable Trusts, a whopping 80 percent of Americans are living in debt. Data provided by the New York Federal Consumer Credit Panel provides more insight into the types of debt that Americans are carrying as well as the ages of these debt-carrying Americans.

While many people may believe that younger Americans are carrying the bulk of U.S. debt, data shows that it’s actually Americans between the ages of roughly 45 and 55 that have the most debt. What’s more, a closer review of this data reveals that older Americans appear to be continuing to accrue debt while younger Americans, with the exception of student loans, are not.

In fact, upon examining five major debt sources including student loans, mortgages, automobile loans, credit cards and home equity lines of credit; older Americans have more debt in four out of the five categories. Younger Americans only have more student loan debt, the average amount of which has doubled since 2003.

A review of Americans debt has led economists to surmise that the U.S. is experiencing a so-called “graying of American debt.” The possible reasons behind this shift are complex and varied and likely include an over reliance on credit cards in the wake of the 2008 economic collapse, the fact that loan originators favor older borrowers and an overall decline in the number of younger Americans who are applying for auto and home loans.

While, on the whole, older Americans are more financially established, at any age, carrying large amounts of debt can become a problem. This is especially true in cases where an individual subsequently experiences a major health event or job loss.

Thankfully, for older Americans who experience financial hardships, the vast majority of debts associated with home and auto loans and credit cards are dischargeable in bankruptcy. For individuals who are experiencing debt problems and who have questions and concerns about keeping a family home or retirement assets, it’s wise to contact a bankruptcy attorney.

Source: Federal Reserve Bank of New York, “The Graying of American Debt,” Meta Brown, Donghoon Lee, Joelle Scally, Katherine Strair and Wilbert van der Klaaw; Feb. 24, 2016

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